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Dell in Formal SEC Inquiry, Delays Filing
DALLAS
(Nov. 06) – Dell Inc. said Wednesday that federal regulators had begun
a formal investigation into the computer giant, which had been part of
an informal inquiry since August.Dell also said it was postponing the
release of its third quarter earnings report – scheduled for Thursday
after markets close – until sometime later in the month.The company
said the earnings report delay was unrelated to the widening Securities
and Exchange Commission probe.A company spokesman told The Associated
Press that the company did not know what the SEC was specifically
investigating.In a press release issued late Wednesday, Dell said the
delay was due to the “level of complexity the company is facing in the
preparation of its preliminary results.””Dell continues to cooperate
with the SEC, and is committed to resolving all issues in connection
with the investigation and regaining compliance with all SEC filing
requirements as soon as possible,” the company added.Rob Enderle, an
analyst for the Enderle Group, said it was too early and there just
isn’t enough information to know what the implications of the formal
investigation could be for Dell.”This is pretty serious,” he said. “It
looks like they’ve got a significant discrepancy that they can’t
reconcile. My guess is it’s something that they misclassified. The
thing is, we don’t know enough other than that there are problems.”The
third-quarter report will be posted as press release and won’t include
the usual conference calls where analysts and reporters can ask
questions of founder Michael Dell and Chief Executive Kevin
Rollins.Analysts, on average, had been looking for third-quarter
earnings of 24 cents per share on sales of $14.44 billion, according to
a poll by Thomson Financial.Dell has yet to file its second quarter
earnings with federal regulators because it has been trying to resolve
unspecified accounting issues with its internal audit
committee.Wednesday’s news is the latest blow for the Round Rock, Texas
company, which lost its No. 1 ranking in personal computer shipments to
rival Hewlett-Packard Co. in October, according to market research
firms IDC and Gartner Inc.Two days before posting disappointing
earnings in August, Dell recalled more than 4 million faulty laptop
batteries made by Sony Corp.Sony-made batteries have since been
recalled by nearly every laptop maker in the world, including Toshiba
Corp., Apple Computer Inc. and Lenovo Group Ltd.Dell shares gained 16
cents to close at $25.75 on the Nasdaq Stock Market on Wednesday before
tumbling 75 cents to $25.16 in after-hours trading.
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